something interesting

Oil stages sharp bounce

Author

bily

| Published on

August 24, 2018

Crude-oil futures early Friday in New York popped higher, on pace to book weekly gains, as investors focused on tightening inventories, including signs of shrinking output from Iran, according to market participants.

Overall momentum for crude prices has been tilted to the upside against a weakening dollar that has also contributed to the mostly bullish weekly trend for crude futures.

West Texas Intermediate crude for October delivery CLV8, +1.14% added 91 cents, or 1.3%, to $68.74 a barrel on the New York Mercantile Exchange, a day after the U.S. benchmark halted a five-session string of gains.

October Brent crude LCOV8, +1.12% picked up $1.04, or 1.4%, to $75.77 a barrel on the ICE Futures platform, a day after the global benchmark snapped a similar streak of price advances.

For the week, WTI is on track to book a roughly 4% climb for the most-active contract, while Brent oil is set to log a 3.8% weekly advance, according to FactSet data.

WTI touched a low of $65.01 a barrel in mid August, compared against its 200-day MA of $64.71 a barrel, until rebounding sharply higher since that point, according to FactSet data. Market technicians tend to use moving averages to determine bullish and bearish momentum in an asset.

A weaker dollar also has offered some buoyancy to dollar-pegged crude futures, with the ICE U.S. Dollar Index DXY, -0.31% a popular dollar gauge, down 0.7% so far this week, making assets priced in the commodity more attractive to buyers using other monetary units.

Stalled discussions between the U.S. and China also grabbed the market’s attention. Midlevel Beijing and Washington officials repeated talking points during the preliminary talks but no immediate agreements were reached, according to The Wall Street Journal, citing people closely tracking the meetings. China’s Commerce Ministry called the meeting “constructive and frank” in a statement.

The negotiations to end protracted tariff disputes come as the two countries imposed tariffs on an additional $16 billion of each other’s imports, bringing the total amount of goods under each country’s levies to $50 billion. Intensifying disputes between the economic superpowers could hurt demand for crude, market participants have warned.

Looking ahead, crude investors will watch a weekly report on rigs drilling for oil in the U.S. from Baker Hughes BHGE, -0.65% after virtually no change to rig-counts at 869 last week. The report offers a peek into the direction of U.S. crude output, and would follow a series of reports that have thus far indicated a tightening trend which has been bullish for prices.

On Wednesday, the Energy Information Administration reported that domestic crude supplies fell by 5.8 million barrels for the week ended Aug. 17. Analysts surveyed by S&P Global Platts had forecast a fall of about 3.4 million barrels.

Many investors on Wall Street will be following a gathering of central bankers in Jackson Hole, Wyo., where Federal Reserve Chairman Jerome Powell will provide more details about the U.S.’s monetary policy strategy and the health of domestic and global economy, which could influence sentiment in the energy complex.

Crude-oil futures early Friday in New York popped higher, on pace to book weekly gains, as investors focused on tightening inventories, including signs of shrinking output from Iran, according to market participants.

Overall momentum for crude prices has been tilted to the upside against a weakening dollar that has also contributed to the mostly bullish weekly trend for crude futures.

West Texas Intermediate crude for October delivery CLV8, +1.14% added 91 cents, or 1.3%, to $68.74 a barrel on the New York Mercantile Exchange, a day after the U.S. benchmark halted a five-session string of gains.

October Brent crude LCOV8, +1.12% picked up $1.04, or 1.4%, to $75.77 a barrel on the ICE Futures platform, a day after the global benchmark snapped a similar streak of price advances.

For the week, WTI is on track to book a roughly 4% climb for the most-active contract, while Brent oil is set to log a 3.8% weekly advance, according to FactSet data.

WTI touched a low of $65.01 a barrel in mid August, compared against its 200-day MA of $64.71 a barrel, until rebounding sharply higher since that point, according to FactSet data. Market technicians tend to use moving averages to determine bullish and bearish momentum in an asset.

A weaker dollar also has offered some buoyancy to dollar-pegged crude futures, with the ICE U.S. Dollar Index DXY, -0.31% a popular dollar gauge, down 0.7% so far this week, making assets priced in the commodity more attractive to buyers using other monetary units.

Stalled discussions between the U.S. and China also grabbed the market’s attention. Midlevel Beijing and Washington officials repeated talking points during the preliminary talks but no immediate agreements were reached, according to The Wall Street Journal, citing people closely tracking the meetings. China’s Commerce Ministry called the meeting “constructive and frank” in a statement.

The negotiations to end protracted tariff disputes come as the two countries imposed tariffs on an additional $16 billion of each other’s imports, bringing the total amount of goods under each country’s levies to $50 billion. Intensifying disputes between the economic superpowers could hurt demand for crude, market participants have warned.

Looking ahead, crude investors will watch a weekly report on rigs drilling for oil in the U.S. from Baker Hughes BHGE, -0.65% after virtually no change to rig-counts at 869 last week. The report offers a peek into the direction of U.S. crude output, and would follow a series of reports that have thus far indicated a tightening trend which has been bullish for prices.

On Wednesday, the Energy Information Administration reported that domestic crude supplies fell by 5.8 million barrels for the week ended Aug. 17. Analysts surveyed by S&P Global Platts had forecast a fall of about 3.4 million barrels.

Many investors on Wall Street will be following a gathering of central bankers in Jackson Hole, Wyo., where Federal Reserve Chairman Jerome Powell will provide more details about the U.S.’s monetary policy strategy and the health of domestic and global economy, which could influence sentiment in the energy complex.

Prime Intermarket Group Asia Pacific Limited, doing business as FXPIG™, holds a Principal's License for dealing in securities, granted by the Minister of Finance and Economic Development of Vanuatu, under the arm of the Vanuatu Financial Services Commission (VFSC Company Number 014578).

FXPIG™ does not open or maintain accounts for Vanuatu based entities or residents or U.S. based entities or residents who are classified as retail or low net worth clients as per the most recent definition of such by the CFTC. Governmental restrictions along with our own internal company policies prohibit FXPIG from opening accounts originating from restricted and/or OFAC sanctioned countries.

Trading in the Forex or CFD Markets is speculative in nature and not appropriate for all investors. Investors in the Forex or CFD Markets should only use risk capital when trading futures, options, and Forex because there is always the risk of substantial loss.